Calcutta, July 7: The Reserve Bank of India will meet Tea Board Chairman on Monday to finalize the modalities for tea exports to Russia. The talks may lead to abolition of the system whereby the Russian importers have to open a letter of credit in favor of Indian firms. The Ministry of Commerce and RBI are working out alternative procedures with the Bank of Foreign Economic Affairs (BFEA) in Russia.

Russia being the key buyer accounted for over 46 percent of total tea exports last year. The state credit route is still the dominant method of payment in tea exports to Russia. However, this meant that transactions costs remained high for importers because they had to provide a letter of credit cover to Indian Companies. The other problem is that payment through this system also take about two and a half month.

An alternative procedure that does not involve opening of L/C by importer and allows outright shipment on the condition that the proceeds are repatriated within 180 days, would help neutralize the higher costs and therefore, make Indian Tea more attractive to the Russian tea market.

South India is major exporter to Russia. The Indian Tea Association has requested to the Ministry of Commerce to get these plans implemented soon.